Your IVA seemed like the perfect solution when it began, but now it may be failing.
Will you be back to square one and have difficult creditors to deal with? Or could you even be made bankrupt?
First, there may be ways to rescue your IVA
An IVA failing may not be a disaster, for some people there are better options! That’s what the rest of this article looks at.
But don’t assume nothing can be done. Unless you want your IVA to fail, it is always best to talk to your IVA firm and ask what options there are.
When you just have a temporary problem, there can be ways to get through it and get you IVA back on track. Sometimes it may be possible to get the IVA completed without any more payments, so your debts are written off, not have it failed – this is more likely later in an IVA. Read Can’t afford your IVA payments? for more details.
If your IVA firm is saying you have broken some rules (the legal term they may use is “in breach of”) and you think this is wrong, unfair or you want to propose a solution, put in a complaint before your IVA is actually failed. Your local Citizens Advice may be able to help.
What happens when an IVA fails
When your IVA fails, your IVA firm will send you:
- a letter of termination and
- a failure report that lists your creditors, what you owed them at the start of the IVA and how much has been paid to them in your IVA. (If your IVA is failing in the first year, this may be little or even nothing as your first payments will have been taken to pay some of the IVA fees.)
Keep these! Even if you are fed up and want to forget about it, at some point you may decide to take action or you may be contacted by a creditor.
Your IVA firm will tell your creditors and the Insolvency Service that your IVA has failed. The Insolvency Service will mark your IVA on the Insolvency Register as having failed. After three months it will be deleted from the Register.
The IVA will remain on your credit record until six years from the date it started, so your credit score will not improve.
If you make any PPI claims, it is very likely that the refunds will be sent to your old IVA firm, not to you.
Will you be made bankrupt?
Most IVAs will have a clause that allows the IVA firm or one of your creditors to make you bankrupt if you break the IVA agreement.
It is rare for your IVA firm to do this as they will have to pay the fee to petition for your bankruptcy. Even if you have a house with a lot of equity, it is unusual. It may happen if you have had a large redundancy payout or an inheritance that you didn’t declare.
Most commercial creditors would not make you bankrupt unless you have a house with a lot of equity. This would have to be a lot more than your total debts as the costs of bankruptcy are very high (tens of thousands) and have to be paid first before creditors get anything. Sometimes HMRC will make someone bankrupt even if they won’t get any money from it.
Will you be hassled by creditors?
This rarely happens immediately but after a few months it may start.
These cases are all very individual – what happens depends on many things including why your IVA failed, whether you have a house with equity, how large a debt is, what sort of debt it is and who the creditor/debt collector is.
What you can do after your IVA has failed
You have five possible options when an IVA has failed:
- you can choose another form of insolvency – a Debt Relief Order or bankruptcy.
- you can do nothing and deal with any debts you are contacted about.
- you can set up payment arrangements (or a DMP) for all the debts in your IVA.
- you can try to settle some of the debts with full & final settlement offers if you have a lump sum of money.
- you can try to set up another IVA.
Looking at these in detail:
1. Choose bankruptcy or a DRO
This is top of the list because if you are renting it is very likely to be your best option.
A Debt Relief Order (DRO) or bankruptcy soon after the IVA failure resolve your debt problems finally. No hassle from creditors. No worry about old debts reappearing after a few years or court or bailiffs.
Some people should never have been sold an IVA in the first place – a DRO or bankruptcy would have been much better solutions instead of an IVA.
Forget everything your IVA firm said at the start about an IVA being better for you than a DRO or bankruptcy – they were wrong about the IVA and they may well have been wrong about DROs and bankruptcy!
And the rules for DROs changed in June 2021 and are changing again in 2024, so a lot more people can qualify for one. For example, the total of debts you are allowed is being increased to £50,000. If your debts are under this and you are renting and you have little spare income, a DRO may be a very good choice for you as you don’t have to make any monthly payments, with your debts being written off at the end of a year. And from April 2024, there won’t be any up front fee in a DRO at all.
2. Deal with debts as you are contacted about them
Here is what happened to one person:
My IVA failed half way through. After it ended one creditor got a CCJ and I arranged payments with another debt collector. I cleared both of those debts. My credit record was then clear after 6 years when the CCJ disappeared. I never heard from the smaller debts in my IVA.
The advantage of doing this is that some debts may never contact you.
Also if you are contacted by a debt collector about a loan, credit card or catalogue that you opened many years before, it is worth asking the debt collector to produce the CCA agreement – if they can’t, it is unenforceable in court and you do not need to pay it. See this National Debtline factsheet for details.
The huge disadvantage is that some creditors may leave it several years before contacting you. At that point your credit record may be back to looking good and you think it’s all gone away. The debts in your IVA cannot become statute barred until at least 6 years after your IVA has failed.
Going for this option may minimise what you repay but it is a stressful route not knowing when a creditor will contact you and it may also prolong the time until everything is finally sorted.
If you are contacted by some large debts after four or five years you may have to go bankrupt then. It would have been much better to have gritted your teeth and gone bankrupt straight away.
3. Set up payment arrangements for the IVA debts
You can contact the creditors individually and set up payment arrangements or go to a DMP firm such as StepChange and ask them to set up a DMP.
The advantage of doing this is you are taking control of the situation and it should reduce or eliminate any hassle from creditors.
The disadvantage is that you have to repay all the debts in full. If this is easy for you, then it would probably have been better to try to resolve your IVA problems and complete that. If it’s hard, or you are only making token payments so the debts will never be gone, you should look seriously at your insolvency options first, before deciding to do this.
4. Make full & final settlement offers on some or all of the IVA debts
Most people who have had an IVA fail don’t have much cash lying around to make settlement offers.
But if a relative could help you with some money, this could be an option. Read this Guide to F&Fs. Also if some of the accounts were loans, credit cards or catalogues that are quite old and which have been sold to a debt collector, read Ask for a CCA before making settlement offers.
5. Set up another IVA
Once bitten, twice shy?
If you have assets to protect and you can afford reasonable monthly payments to your debts, it may be worth talking to another IVA firm to see if they think a second IVA could work. Expect to be asked a lot of questions about why your first IVA failed! If you don’t have assets to protect, look at a DRO or bankruptcy instead – they are simpler and they don’t go wrong.
If you want to try this, talk to one of the smaller IVA firms where you will get more individual consideration.
Best to decide what to do, not delay
You may feel battered and bruised after your IVA has failed. The last thing you want is to do is talk to debt advisers or creditors. But it’s usually best to make your mind up what you will do, not just try to ignore the situation. Get some good debt advice as soon as possible and take back control.
Where to get good debt advice
Change from an IVA to a DRO?
Articles about DMPs
Martin says
I have been regularly paying my Iva for 3yrs, The original debt was 24k but £6300 was quoted as being owed. I just asked much a full and final settlement would be, Creditfix reply was roughly 24+k, how has this happened?
Thank you
Sara (Debt Camel) says
have you talked to National Debtline about this and about whether you qualify for a DRO?
Martin says
I have had to give up my flat because of the rise in inflation so I probably be over the £75 threshold. I entered the Iva in the belief 80% of my debt would be cleared, is this correct?
Thank you
Sara (Debt Camel) says
where are you living at the moment?
Martin says
Sofa surfing atm
Does it seem that I will be paying the debt in your opinion please?
Sara (Debt Camel) says
Do you now have money to make a settlement offer? where from?
Natalie says
Hi everyone
I’m in a difficult situation and I would appreciate some advice. I took an IVA out 6 years ago following leaving an abusive relationship. I had a few payment breaks as found it difficult to pay at times. The estimated end date for Iva is Jan 24 . However in the meantime I have incurred further debts from expensive loans and credit cards – I was in a relationship which broke down last year , I sort of thought we’re going to pay the debts together but I’m left to pay them now. They are in my name. Now I am struggling to pay everything back with all the prices increase I’m left with literally nothing . I don’t know what to do. I obviously breached the terms of the Iva ( with step change). I don’t know what to do. Part of me thinks I should discuss it with them. But I’m not sure what to do.
Would it be possible to go bankrupt to cumulate what is left from current Iva with what I have incurred? Thank you 🙏🏼
Sara (Debt Camel) says
how large are the debts in your IVA? how large are the new debts?
Are you buying or renting?
Do you have a car worth more than £2000?
Natalie says
Iva debts are @30.000 last estimate payment Jan 24
New debts @ 9000
I am renting through a housing association
I’m driving a car bought on finance 64 number plate for which ex partner is still paying for another year I think -so it is in his name ( he agreed to pay that as I have 3 children to get to schools plus a job which involves driving)
I work for NHS but not in a leading position
Iva is only in my name
Sara (Debt Camel) says
do you know if you will still be able to drive the car when the finance has finished?
Natalie says
Hi Sara
I just checked the docs. It is a hire purchase agreement for 61 months . First payment went out on 30/12/19 so there are approximately 2 and half years left to pay!
His name is on the contract. I am the registered keeper of the car on DVLA doc. Have no idea what is going to happen. To be honest with you I’m always thinking one of these days they’re going to come get the car from me- if he stops paying. I’m not in touch with him. He left me last July one morning got out the door saying that I need to arrange to pay rent and everything else. He will pay for the car. Few months down the line I found out he moved in straight away with a work colleague they were obviously having an affair for some time . I tried on a few occasions via email to discuss what happens with the car as I haven’t got any means to get another one and is vital for school and work. Not mentioning that I paid nearly 1000£ last year for repairs and tyres as would not pass MOT. He did not want to contribute with anything. Every time I asked he didn’t give any details he just said he will continue paying for the car. For how long God knows. So yeah there are another 2 1/2 years to pay. But it is not my car it is in his name and I am allowed to drive it. I guess that’s where I stand .
Sara (Debt Camel) says
ok in that case the car is not at risk if you go bankrupt because it is not owned by you and the payments are not being made by you.
You do need to explain to StepChange what has happened. If was just that you couldn’t pay the IVA, something could probably be sorted out. But because of these extra debts which breached the terms of your IVA StepChange may well say that the IVA needs to fail and you can then go bankrupt. For which there is a fee of £680, so you need to think about how you can start saving that up. What benefits are you getting at the moment?
Natalie says
Universal credit and child benefit that’s all in addition to my salary. No child maintenance nothing. Thank you 😊
Sara (Debt Camel) says
then in that case you should receive an extra £326 in the second half of July – this is intended for help with your winter fuel bills. But you may decide that it would be a big help towards the £680 bankruptcy fee.
Do talk to StepChange now – I know it’s a difficult conversation but you cannot carry on like this, you need to get a plan.
Natalie says
Thank you Sara
I need to make a decision soon
Many thanks again and will get back to say what I’ve done ! :-)
Natalie says
Sara can I just ask , as it is playing on my mind, would the bankruptcy affect my job? I work with NHS and I do nursing assessments to determine eligibility for NHS funding …I’m not the decision maker . I usually make a re commendation together with a social worker then our recommendation is verified/ ratified by a senior CHC panel. I’m a band 6 nurse assessor. I’m afraid and ashamed to ask. Thank you
Sara (Debt Camel) says
I would be surprised. HR should be able to tell you, or talk to your union.
Natalie says
I shall see… anyway many many thanks for advice! I’ve been looking at this website for quite a while now. Lots of helpful insights! Thank you 😊
Dave says
Hi I am 5 years into 6 year Iva I was issued a breach in jan 2020 for not doing annual review I foolishly ignored but have never heard anything since my monthly payment of £400 has continued to be taken and I have never missed a payment I have never done a annual review I only recently looked at email which is a old account that I don’t use anymore plus I Am not tech savvy I was told once Iva started that was end of my problems and at that time I was at such a low point I agreed to anything any advice would be great thanks
Sara (Debt Camel) says
I think you have to talk to your IVA firm and ask what is happening to your IVA. Make sure they have your current email address.
Dave says
Hi Sara
Thanks for your reply
Does the fact that I never heard anymore from them and they have continued to take payment each month mean anything
The amount owed was £43000 and I am paying £400 per month for 6 years
I know this all may sound a bit flakey but at the time they told me to sign up and not worry so I did
Since covid hit I have basically gone to work and done nothing else and have managed to save money without really trying which I am during for a holiday next year when Iva finished can they take this money
Thanks again
Sara (Debt Camel) says
Does the fact that I never heard anymore from them and they have continued to take payment each month mean anything
It would certainly be unusual to take your money if they had failed your IVA – but that is why you have to ask what is happening. You can’t reply on general statements from me.
can they take this money
Yoru IVA will nto complete and your debts be written off without a full review of your income and expenditure over the 6 years. It may well be that if you have managed to saved money easily that you should have been paying more into your IVA… and yes the IVA firm will want this paid.
It may also be that you are facing much higher bills and prices aat the moment so your expenses now are a lot higher.
But you are going to have to go through evry year with them. It’s time to stop pretending this problem isn’t there and talk to your IVA firm.
Joy says
What can I do the company I have IVA with it goes bankrupt 🥺
THE IVA ADVISOR LTD (2 nd IVA) £146/ month I have been paid for three months.
I failed 1st IVA with payplan only £50/month (perhaps a bit more) but covid 19 I did not have income.
Sara (Debt Camel) says
yes, they have gone into administration. Your IVA however should simply be carrying on.
Who is the named insolvency practitioner on your IVA?
How affordable are the £145 a month payments at the moment? Can you say something about your situation – do you own a house with equity? ? How large are the debts that went into your IVA?
Joy says
House is belong to my husband I never pay anything. Debt is over 30,000. I am self employed running a shop. Electric bill is higher and everything has changed. £146 at the moment is rocking for me. Can I send his name privately?
Sara (Debt Camel) says
initials PJ?
Joy says
Yes he is but his AC joint colleague sent information
Sara (Debt Camel) says
ok so you know who to get in touch with if you have to. But as i said, the firm failing does not affect your IVA.
If the current payments are unaffordable now or are likely to be quite soon, I suggest you should now talk to Business Debtline about your options https://www.businessdebtline.org/. You may need to consider if your business is viable – and what the inmpact is then on your personal debt options if it is or it isn’t. BD can help you look both at the business and your personal debts options.
Nick says
My current Iva is currently due to end in March 2023 I have not been able to afford to pay since last July 2021 – I lost my job in July 2021 and I’ve been working on minimum wage since and really struggling to pay everything my Iva company have gave me no guidance or next steps.
Sara (Debt Camel) says
So you haven’t paid for 14 months? Is your IVA pushing you to pay or just not saying anything?
Can you say how large the debts going into the IVA were at the start? And what your monthly payments were?
Are you buying or renting?
Do you own a car, wiorth how much?
Nick says
My debt was in the region of 22k I am in a rented accommodation I literally earn enough to pay rent and eat – they emailed me this week to say they will fail the Iva not sure what to do now. Did try to call them yesterday and today no luck.
Sara (Debt Camel) says
do you have a car?
you paid all the payments for the firs 3 years and 3 months?
did you explain before that you could no longer afford to pay?
Natalie says
Hi Sara
I have been in touch here a few months ago … I have an Iva which I am supposed to finish in January 2024 however I did accumulate @ 10k unsecured debts over the last 6 years.
I am embarrassed to tell Step change about the situation … I was struggling along paying the minimum monthly but I wasn’t able any longer from September so I stopped paying some credit cards and loan. I am unsure at this moment in time what to do … I am worried that bankruptcy will affect my eldest daughter getting a student loan? If you enter a bankruptcy do they come in your home and take stuff ?
Sara (Debt Camel) says
You HAVE to tell StepChange what has happened. I know this must feel difficult or impossible but you cannot stay in this nightmare limbo. StepChange will be professional, not cross with you.
If you go bankrupt, this will have no effect on your daughter getting a student loan. And no effect on her credit record.
No one visits your house or takes away stuff. Unless you own your house (you don’t) or a car worth over 2k (you don’t) it is VERY VERY unlikely you would lose anything in bankruptcy. See https://debtcamel.co.uk/debt-options/bankruptcy/ which looks at the big questions people ask about bankruptcy. And also read https://debtcamel.co.uk/lawnmower-bankruptcy/
Natalie says
Hi Sara
Hope you’re ok. Have finally told Step change about the debt incurred during the IVA and they replied by email – after 3 weeks claiming they were trying to get hold of me on the phone ( which doesn’t take calls from unknown numbers) that I need to pay the IVA
I was absolutely baffled to be honest! I thought they are going to fail the IVA! They will review my budget but they said I need to finish paying the IVA and make arrangements to pay the other creditors as much as I can . IVA is the priority then the other debts !
I arranged a payment plan with 118 but I have no energy to deal with the others
Sara (Debt Camel) says
You need to phone StepChange and talk to them. Ask them for advice about failing the IVA now and going bankrupt – this may be a much better option for you. . Paying the IVA until 2024 and then tacking 10k of expensive debt doesn’t sound like a good idea to me, but you need to take proper debt advice on this. Paying an IVA is not legally a priority debt.
Natalie says
Thank you Sara today I received an email from stepchange stating they are holding a virtual meeting with creditors to consider a proposed mass variation of all IVAs supervised by CL of stepchange! The proposed variation is
1 the supervisor will be allowed to review debtor’s income and expenditure to take account of rising costs- supervisor be able to reduce the surplus by up to 50% or down to a maximum of £50. Whichever is higher!
2. Supervisor Will have discretion to extend duration of arrangement to allow any existing payments missed up to maximum 3 payments … Have not got in touch with them yet to discuss … I am ,as I said, still in shock they haven’t failed my IVA. Am I correct to assume they didn’t because they hope to still get money from me? I guess a small amount is better than nothing?
I will let you know what happens. I’m just not in a good place, have got ongoing mental health issues which are affecting me physically now, work all the time, haven’t found the time and motivation to deal with it. Yet
Sara (Debt Camel) says
That is very interesting but probably not really relevant to your situation. Your situation is the large amount of extra debt incurred outside the IVA, not the 2022 cost of living increases.
I think StepChange must be getting a LOT of people contacting them about cost of living problems. It may be that they are assuming that this is at the root of your problem and the mass variation will resolve it. It isn’t clear to me that it will…
I think you should phone them up and say thanks for the email but you want some debt advice from them about whether your best option is to fail the IVA and go bankrupt.
Mya says
Hi I’ve been on an iva for about 3 years now.
I owed about 7 thousand.
A friend of mine was at my house and we put some money on my betting account to try our luck we won a big amount the only thing is as it’s on my account it needs to go through my bank to cash it out. It’s not all my money as we split the bet they are going to give me some money but not enough to pay off the debt. I’m worried I’m gonna be taken to court over it is as I can’t pay it all off as it’s not just my money there anything I can do? And do you know what will happen to me
Sara (Debt Camel) says
Is there any proof that you did split the bet? Eg did your friend deposit money into your betting account?
Mya says
No there’s no proof they gave me cash.
Sara (Debt Camel) says
How large was the win?
Craig Finn says
I am 4 years into an IVA with FSS. My parents both passed away during the term of the IVA. I now live in the family home with my Brother (he has a 2/3 share, me a 1/3 share). As i am now rent/mortgage free, my payments into my IVA have increased substantially. My solicitor wrote to my supervisor stating this asset cannot be realised. However i have been contacted today by FSS, stating my creditors have to agree to this and that they were proposing a further extension of 1 year to my IVA (already at 6 years after initially being told it would be for 5 years during what i now recognise was a “hard sell” when i was rather vulnerable/stressed over my debts. I have never missed a single payment & due to the incompetence of FSS underpaid my IVA for a 2 year period and which they acknowledge was down to an administrative error” on their part. I have paid the breach back consistently, despite it not being my fault. Them asking me to extend by another year & insinuating my creditors could ask for the IVA to fail, seems very coercive & i have point blank refused to extend it this morning & will await word from my supervisor as to their next step. I have 2 years left to complete my IVA, have not missed a single payment & am able to increase my monthly payments further for the final 2 years, rather than face another extension. Any thoughts/advice greatly appreciated.
Sara (Debt Camel) says
The administrative error is annoying but not really relevant to the decision here. Have you added up how much you will be paying over the 6 years – how does that compare to the value of your debts that went into the IVA?
Craig Finn says
My annual review is due next month. I was going to wait for my statement to see the figures. Over the 6 years i would be paying back a considerable chunk of the original debts (way beyond the “up to 80% of your debts may be written off” sales pitch i originally got). Trouble is a large chunk goes towards FSS mgt fees and not the debt, so i guess it’s interest in a different guise. If i agree to increase my monthly repayments over last 2 years, rather than extend the IVA a further year. I can’t really see how they would still push for the IVA to fail, other than pure greed.
Shirley says
My husband died 3 months ago and had iva, they have sent me emails asking for insurance and inheritance information, but they don’t want to give me information on how much is owed, what should I do?
Sara (Debt Camel) says
I am sorry to hear this and the IVA firm is making your life even more difficult
Who was his IVA with?
Did you jointly own a house? Did he own a car?
How large were the debts that went into his IVA and how long ago did it start?
Vicky says
My husband has had an IVA for the last 5 years which he has been paying £153 a month for a £13000 debt which totals around £9000. We have received no correspondence from said company regarding income and outgoings and after sending his tax returns for the last 4 years (I can’t find the one for 2019), I have received this:
Between the 47 months of May 2020 to April 2024 his total allowed income was £48,236.10 (47*£1,026.30) and the Tax Returns showed that he earned £76,312.45 in the same period which is £28,076.35 above the 10% allowance and 50% of that is due in to the IVA which totals £14,038.18.
Does that mean they are expecting him to pay £14k? The company is closes at 12pm on a Friday so they sent the email at 2pm knowing I would not be able to call them.
I don’t understand it because it reads like they want an extra £10k over the £4k outstanding debt that was adjusted by the IVA
Sara (Debt Camel) says
So he hasnt had any annual reviews? Which IVA firm is this?
Vicky says
He started with freeman jones initially but ended up with financial wellness…we are not even sure when the IVA changed from one to the other. We have had no letters from them in the last 5 years and was unaware this was something which needed doing. Now we are reaching the end of it and it seems to have turned from something so promising to a complete nightmare.
Sara (Debt Camel) says
So presumably your expenses have gone up a lot over the last 5 years? rent, council tax, petrol, car insurance, food, energy bills etc?
Vicky says
Absolutely everything went up.
Sara (Debt Camel) says
Do you think you ar3 any better off now than 5 treats ago or hav3 the expenses just gone up with the wages
Anonymous says
Hi, just a little advice I’m seeking. I’ve been with Iva for 3.5 yrs now and have about 3.5k left to pay. I’ve fallen behind on payments since January. reason being i fell in to gambling addiction etc. I go the help and no longer gamble. I did contact them and told them and they were kind about it gave me a few solutions. They asking for my bank statements ( 3 months ) the issues here is. I was using my friends car and i was the car insurance policy holder and i was hit and the car was written of. the car value was 4k. The insurance transferred the money to my bank and now it will show up the 4k on the bank statement. My plan is to just cancel the IVA and try to go with DRO, just a bit worried if the creditors will try to bankrupt me even tho i haven’t go a single asset that is worth more than £500 to my name. I have till Friday to make a decision. This probably sounds pathetic and its fine if you think that way too. Thanks for any advice
Sara (Debt Camel) says
So the car belonged to your friend and your IVA firm knew you were driving this? So you need to pay the 4k to your friend?
Do you need a car?
What is this Friday deadline?
Madeleine says
Hi I am self employed on an IVA. I only have about 4 payments left. I’m really worried as I got a new job and was doing an eligibility checker and got accepted for a Zopa credit card. £250 limit. Which I pay on time. I was struggling as I had to wait longer for my first wage and I needed uniforms. As it’s under £500 have I broken my IVA? I know it’s different for self employed IVA’s. Also what do they look at when the IVA finishes. Do they look at all the transactions? As my mum was diagnosed with a terminal rare cancer so they gifted me some money without me knowing and it was over £500. I had to take it out in bits (due to card limits) and give it back to them as I didn’t want their money going on my debt. I wanted them to enjoy their money themselves. I’ve had IVA reviews since and they never mentioned anything then? I was with a company called Jarvis but they now operate under Debt Movement. I pay £90 a month. I e always paid apart from a 3 month holiday over Covid. I have also since been diagnosed with ADHD which explains my poor self control with money but I am working on learning how to budget and not impulse buy. Will my IVA fail?
Sara (Debt Camel) says
I doubt the zopa card will be a problem, but are you using it every month? I suggest stopping using it and paying a bit more than the minimum to clear it faster
You didn’t say how large the gift of money you returned was. It may be that DM just do a low key final review rather than going back through previous years.